CHANGES ON THE HORIZON?
WVHFMA WINTER EDUCATIONAL MTG JANUARY
23, 2014

• ACA INTERNATIONAL & HFMA JOINT TASK
FORCE ON MEDICAL DEBT
• IRS REGULATIONS
• HOW IT MAY AFFECT YOUR BAD DEBT
VENDORS
• QUESTIONS

This presentation is for informational and educational purposes only. The content of this presentation is not intended to serve as legal or other advice and should not replace the advice of your own legal counsel.

2012 – ESTIMATED
--- Estimated National Health Expenditures of approximately $2.8 trillion
--- Of total expenditures, $320 billion was
paid out of pocket (i.e. deductibles, copayments, co-insurance)

2020 – PROJECTED
--- Estimated National Health Expenditures of
$4.4 trillion
--- Of total, $411 billion is estimated will be paid out of pocket

In 2012, 32 million American adults were contacted by a collection agency for unpaid medical bills.
Source: The Commonwealth Fund Biennial
Health Insurance Survey (2012)

More than half (52%) of accounts in collection are medical bills.
More than one-third (36%) of medical collections had balances due, when reported, of $100 or less.
An Overview of Consumer Data and Credit Reporting, Avery et al Federal Reserve Bulletin, Summer 2003

MEDICAL DEBT COLLECTION TASK
FORCE
What is it?
Group including representatives from healthcare finance, 3 rd party collections and patient advocate organizations led by HFMA and ACA International to help make paying medical bills an easier and fairer proposition for consumers.
15 members on the Task Force.

MEDICAL DEBT COLLECTION TASK
FORCE
• INTENDED TO IMPROVE THE MEDICAL ACCOUNT
RESOLUTION PROCESS.
• THESE ARE VOLUNTARY GUIDELINES AND
COMPLEMENT EXISITNG FEDERAL, STATE AND
LOCAL LAWS GOVERNING THE RECOVERY OF
MEDICAL DEBT.
• PROVIDE GUIDANCE ON RESOLVING FINANCIAL
OBLIGATIONS BEFORE, DURING & AFTER A
PATIENT VISITS A HOSPITAL OR OTHER SETTING.

MEDICAL DEBT COLLECTION TASK
FORCE
• GOAL OF THE TASK FORCE
– TO IDENTIFY A COMMON SET OF ACCOUNT
RESOLUTION BEST PRACTICES THAT ALIGN WITH
HFMA’S PATIENT FRIENDLY BILLING PRINCIPLES
AND EMERGING FEDERAL REQUIREMENTS TO
SIMPLY THE PROCESS FOR PATIENTS.

GOALS (CONTINUED)
Keep in mind the various laws not only in practice today, but look ahead in anticipation of future legislation.
Keep the patient experience as the number one priority.

MEDICAL DEBT COLLECTION TASK
FORCE
SUMMARY OF SOME OF THE BEST PRACTICES
– IMPROVE PATIENT EDUCATION AND
COMMUNICATION.
• Take responsibility for educating patients about their payment options and responsibilities. Be proactive about communicating available financial assistance policies and procedures.

MEDICAL DEBT COLLECTION TASK
FORCE
SUMMARY OF BEST PRACTICES (CONTINUED)
-MAKE BILLS PATIENT-FRIENDLY
All financial communication should be clear, concise, correct and patient friendly. (HFMA’s
Patient Friendly Billing Project)

MEDICAL DEBT COLLECTION TASK
FORCE
• SUMMARY OF BEST PRACTICES (CONTINUED)
- ESTABLISH POLICIES FOR ACCOUNT
RESOLUTION AND ENSURE THAT THEY ARE
FOLLOWED.
Make sure that key account resolution activities are governed by your organization’s board-approved policies.

SUMMARY OF BEST PRACTICES (CONTINUED)
- REPORT BACK TO CREDIT BUREAUS WHEN
AN ACCOUNT IS RESOLVED.
If a past due account is reported to a credit bureau, the reporting entity should report back to the bureau when the account is satisfied.

SUMMARY OF BEST PRACTICES (CONTINUED)
- TRACK ALL CONSUMER COMPLAINTS
This information should be shared between the business affiliate and the provider to improve customer service, hasten account resolution and avoid recurring grievances.

SUMMARY OF BEST PRACTICES (CONTINUED)
- USE ESTABLISHED HFMA AND ACA BEST
PRACTICES, PRINCIPLES, AND GUIDELINES TO
INFORM YOUR ORGANIZATION’S APPROACJ
TO MEDICAL ACCOUNT RESOLUTION.
This includes HFMA’s Best Practices for Patient
Communications, HFMA’s Patient Friendly
Billing Project; ACA’s Health Care Servicing
Guidelines and ACA’s Code of Ethics.

MORE DETAILED INFORMATION ABOUT THE
TASK FORCE AND THEIR REPORT IS AVAILABLE
AT WWW.HFMA.ORG/MEDICALDEBT .

PROPOSED RULE – IRS 501r
US Dept of the Treasury and IRS Proposal
Seeks revisions for charitable hospitals and their exemption status.
As of January 16, 2014, with the final rules
NOT yet released, the IRS advised charitable hospitals to refer to the proposed rules issued in June 2012 and April 2013 regarding 501(r).

THE IRS ISSUED 2 NOTICES DURING THE WEEK
OF JANUARY 16, 2014 INSTRUCTING
HOSPITALS TO FOLLOW PROPOSED RULES
THAT IMPLEMENT AFFORDABLE CARE ACT
REQUIREMENTS.

The Treasury stated in a blog post about the guidance.
“We want to remind charitable hospitals that they must take steps to protect patients – including protecting them for hidden and high prices and unreasonable collection actions.”

FIRST NOTICE
Includes a procedure for hospitals to correct and disclose failures to satisfy the requirements under section 501(r) of the IRS Code.
Following this process would assure hospitals that they would not lose their tax-exempt status.

SECOND NOTICE
Specifies charitable hospitals responsibilities under section 501(r). Specifically, the proposed rules require tax-exempt hospitals to “clearly define the financial assistance available, how to apply for it and publicize their policies so that community members are aware aid is available.”

Medical Debt Responsibility Act of 2013 –
S.160 (introduced by Senator Merkley)
7 Co-sponsors. In August 2012, Senator
Merkely and others sent a letter to the CFPB asking them to address the impact of medical debt and consumer credit.
House Companion bill (HR 1767) introduced by
Ranking Financial Services Member V. Waters.
18 co-sponsors

Accuracy In Reporting Medical Debt Act of 2013
HR 2211
Introduced by G. Miller (R-Ca) along with C.
McCarthy (D-NY) on 5/24/2013.
Amends the FDCPA to prevent credit reporting of a disputed debt for 120 days. But can still report after 30 days if no dispute.

Some states are also trying to enact their own bills to address medical debt collection.
Indiana – Senate Bill 290.
Prohibit the collection of prejudgment interest in medical collection cases.
Shorten the Statute of Limitations on medical debt from 6 years to 2 years.
Permit defendants to consolidate cases into one.

Will other states attempt to pass bills that affect medical debt collection?
ACA International and the state units are constantly monitoring these types of legislation.

Possible effects:
Increase costs to do business.
more regulations/requirements
Bad debt medical accounts may be more difficult to collect.
Less accounts being transferred to true baddebt. Possible more to early-out or precollection programs.

Jill Epstein
Unit President/Council Delegate, Associated
Collection Agencies of WV, Inc.
Sales Manager, HealthCare Financial Services jillian.epstein@camc.org
304-388-6807 – Telephone (Direct)